News and Insights

Louisiana Toughens Hiring Requirements for Enterprise Zone Program

Tax Development Jun 26, 2013

Louisiana Governor Bobby Jindal has signed into law a bill that disqualifies many retailers from participating in the state’s Enterprise Zone Program (“Program”) and makes other changes to the Program’s required employment criteria. House Bill 571 (“H.B. 571”) became effective immediately when Governor Jindal signed it on Friday, June 21, 2013. The bill makes several significant changes to the Program.

  • It increases the percentage of new jobs that a participant must hire from targeted groups to qualify for the Program from the current 35% to 50%. Under the bill, companies must hire 50% of their new jobs from at least one of the three targeted groups: enterprise zone residents, persons receiving some type of public assistance during the six-month period prior to employment, and persons who lack basic skills and are unemployable by traditional standards.
  • Part-time jobs will no longer qualify for the Program. Only full-time jobs would be eligible. Previously, part-time jobs counted if the employee worked a minimum of 20 hours per week for at least six months.
  • Many large retailers would no longer qualify for the Program. Under the bill, a retailer whose activities are defined by Sectors 44 or 45 of the North American Industry Classification System (NAICS) that has more than 100 employees nationwide—including employees of affiliates—will be ineligible for the Program, except for pharmacies and grocery stores located in enterprise zones. Retailers that have less than 100 employees will still qualify for the Program. The Louisiana Department of Economic Development (“LED”) is expected to promulgate a rule to address how the new criteria would apply to certain large retailers that are within the NAICS 44-45 sector but also have pharmacy or grocery sales in their stores.

The state requires that applicants for the Program submit an Advance Notification form prior to commencing a project and hiring workers. The new law will apply to Advance Notifications filed on or after the effective date.

Program participants receive a one-time $2,500 job tax credit for each permanent net, new job created and a 4% rebate of state sales and use taxes paid on materials, machinery, furniture, and equipment purchased during the project period set forth on the Advance Notification form or a 1.5% refundable investment income tax credit on capital investments made during the project period.

H.B. 571 is amending crucial requirements for the hiring portion of the Enterprise Zone Program, which could affect business strategies. To receive a full text of the bill or for questions regarding the new requirements, please contact the Ryan Principals listed below.